Council tax bills in England are set to increase by up to 5% starting in April 2024, with the government confirming it will maintain the current cap on rises for the upcoming year.
Communities Minister Matthew Pennycook defended the decision, stating that the 5% cap was the “right threshold” given the ongoing financial pressures on local council budgets. The increase means that the average household in England will face an additional £100 or more on their annual council tax bill, which is above the current inflation rate.
The government estimates that an extra £1.8 billion will be raised through council tax in the 2025/26 financial year. However, the decision to keep the cap has sparked criticism from the opposition. Conservative members, including leader Kemi Badenoch, accused the Labour-led government of leaving a “black hole” in local government finances, arguing that councils are being forced to rely too heavily on local tax increases rather than adequate funding from central government.
Under the current system, councils that provide social care services are allowed to raise council tax by up to 5%, while other councils can increase rates by up to 3%. Councils wishing to exceed these limits must either seek government approval or hold a local referendum. The average Band D council tax rate for 2024/25 has been set at £2,171, which represents an increase of £106, or 5.1%, from the previous year.
The announcement followed Prime Minister’s Questions, where Conservative leader Kemi Badenoch pressed Labour leader Sir Keir Starmer on whether the 5% cap would remain. Prime Minister Rishi Sunak did not directly address the question, and Pennycook later confirmed that the cap would remain unchanged.
Pennycook assured the Commons that the government remains committed to supporting vulnerable households, pointing to the 25% council tax discount for people living alone, as well as other financial assistance programs. According to the government, more than eight million households benefit from these support measures and do not pay the full council tax bill.
However, Pete Marland from the Local Government Association (LGA) warned that while council tax income is essential for local services, it is not enough to meet the growing financial pressures on local governments. He also highlighted the disparity in council tax revenue across different regions, which does not always align with local needs.
Marland called for a fundamental change in funding mechanisms to ensure that local governments can deliver the services that communities require.